Editing David Ricardo (section)

==Ideas==
Ricardo wrote his first economics article at 37, firstly in ''[[The Morning Chronicle]]'' advocating reduction in the note-issuing of the [[Bank of England]] and then publishing ''The High Price of Bullion, a Proof of the Depreciation of Bank Notes'' in 1810.<ref>{{cite book|last=Hayek|first=Friedrich|title=The Trend of Economic Thinking|contribution=The Restriction Period, 1797–1821, and the Bullion Debate|year=1991|url= https://archive.org/details/TheTrendOfEconomicThinking|isbn=978-0865977426|pages=[https://archive.org/details/TheTrendOfEconomicThinking/page/n209 199]–200|publisher=Liberty Fund }}</ref><ref>{{cite book|last=Sraffa|first=Piero|title=The Works and Correspondence of David Richardo|year=1973|url= https://oll-resources.s3.us-east-2.amazonaws.com/oll3/store/titles/204/0687-03_LF.pdf }}</ref>

He was also an [[abolitionism|abolitionist]], speaking at a meeting of the Court of the [[East India Company]] in March 1823, where he said he regarded [[slavery]] as a stain on the character of the nation.<ref>{{cite book |last1=King |first1=John |title=David Ricardo |date=2013 |publisher=Palgrave Macmillan |page=48}}</ref>

===Banking===

[[Adam Smith]] argued that [[Commercial banking|free commercial banking]], such as the banking system in Scotland which had no [[central bank]] when ''[[Wealth of Nations]]'' was written in 1776, was favourable to economic growth. Writing just a few decades later, Ricardo argued for a central bank, a cause that was taken up by his students, including [[John Stuart Mill]], who was known to favour the ''[[laissez-faire]]'' policies in every place but banking.

Ricardo wrote the ''Plan for the Establishment of a National Bank'' (published posthumously in 1824), which argued for the autonomy of the central bank as the issuer of money.<ref name=bindseil2019>{{cite book |title=The Oxford Handbook of the Economics of Central Banking |date = 15 March 2019|url=https://books.google.com/books?id=jtmUDwAAQBAJ |page=59|publisher = Oxford University Press|isbn = 978-0-19-062619-8}}</ref>

Ricardo proposed that a ratio of gold and Treasury bills, and a fixed claim (asset) against the government, would secure the central bank's liquidity:<ref name=binsdseil2019>{{cite book |last=Bindseil |first=Ulrich |title=Central Banking Before 1800: A Rehabilitation |publisher=Oxford University Press |date=2019 |isbn=978-0-19-884999-5 |url=https://books.google.com/books?id=fNrBDwAAQBAJ}}</ref>

<blockquote>The public, or the Government on behalf of the public, is indebted to the Bank in a sum of money larger than the whole amount of Bank notes in circulation; for the Government not only owes the Bank fifteen million, its original capital, which is lent at 3 per cent. interest, but also many more millions which are advanced on Exchequer bills, on half-pay and pension annuities, and on other securities. It is evident, therefore, that if the Government itself were to be the sole issuer of paper money instead of borrowing it of the Bank, the only difference would be with respect to the interest: the Bank would no longer receive interest and the Government would no longer pay it; but all other classes in the community would be exactly in the same position in which they now stand.</blockquote>

Ricardo was a man of many trades, economically and financially speaking. Ricardo was able to recognize and identify the problem presented through banking within regulations and debauched standards of approval at certain times. Ricardo knew that banks in rural areas as well as the Bank of England had increased note lending and overall lending in 1810. Through this, Ricardo proved subsequent changes in price level through the market was also affected and thus new regulations needed to be made available. Furthermore, Ricardo was able to understand and distinguish the socioeconomic makeup that created and established parameters around different classes within the economy. Ricardo advocated for the productive powers of labour to be held in high concern as the most influential of devices that played a role in the progression of the American Economy along with others. In addition, Ricardo made notable advancements in the concept build involving reactions in the open market when considering banking altercations, stock investments, or other considerable impacting events. Ricardo wanted to establish a firm ground between the bank and the control over monetary policy because there was power within the banking system that Ricardo believed needed to be considered carefully. In 1816, Ricardo said “In the present state of the law, they have the power, without any control whatever, of increasing or reducing the circulation in any degree they may think proper: a power which should neither be entrusted to the State itself, nor to anybody in it; as there can be no security for the uniformity in the value of the currency, when its augmentation or diminution depends solely on the will of the issuers.” Ricardo felt the circulation of money and the decision behind how much is available at any time should not be entrusted to either the State, or any individual. Ricardo argued for the most even distribution possible with the highest control readily available.

===Value theory===
David Ricardo worked to fix the issues he felt were most concerning with [[Adam Smith]]’s Labour Theory of Value.<ref>{{Cite web |title=Adam Smith on the Labor Theory of Value {{!}} Adam Smith Works |url=https://www.adamsmithworks.org/documents/steven-horwitz-adam-smith-on-the-labor-theory-of-value |access-date=2024-05-13 |website=www.adamsmithworks.org |language=en}}</ref> Both men worked with the assumption that land, labour, and capital were the three basic factors of production. However, Smith narrowed in on labour as the determinant of value. Ricardo believes that with production having three factors it is impossible for only one of them to determine value on its own.<ref>{{Cite book|last=Sandmo|first=Agnar|title=Economics Evolving A History of Economic Thought|publisher=Princeton University Press|year=2011|isbn=978-0-691-14063-6|pages=74–76}}</ref> Ricardo illustrates his point by adapting Smith's deer-beaver analogy<ref>{{Cite web |title=Adam Smith on the Labor Theory of Value {{!}} Adam Smith Works |url=https://www.adamsmithworks.org/documents/chapter-vi-of-the-component-parts-of-the-price-of-commodities |access-date=2024-05-13 |website=www.adamsmithworks.org |language=en}}</ref> to show that even when labour is the only factor of production the hardship and tools of the labour will drive a wedge in the relative value of the good. Due to his criticisms of the Labour Theory of Value [[George Stigler]] called his theory a "93% labor theory of value".<ref>{{Cite journal|last=Stigler|first=George J.|year=1958|title=Ricardo and the 93% Labor Theory of Value|url=https://www.jstor.org/stable/1809772|journal=The American Economic Review|volume=48|issue=3|pages=357–367|jstor=1809772|issn=0002-8282}}</ref>

Ricardo's most famous work is his ''[[Principles of Political Economy and Taxation]]'' (1817). He advanced a [[labour theory of value]]:<ref>Ricardo, David (1817) ''On the Principles of Political Economy and Taxation''. Piero Sraffa (Ed.) Works and Correspondence of David Ricardo, Volume I, Cambridge University Press, 1951, p. 11.</ref>

<blockquote>The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour.</blockquote>

Ricardo's note to Section VI:<ref>Ricardo, David (1817) ''On the Principles of Political Economy and Taxation''. Piero Sraffa (Ed.) Works and Correspondence of David Ricardo, Volume I, Cambridge University Press, 1951, p. 47.</ref>

<blockquote>Mr. Malthus appears to think that it is a part of my doctrine, that the cost and value of a thing be the same;—it is, if he means by cost, "cost of production" including profit.</blockquote>

===Rent===
{{Main|Law of rent}}
Ricardo contributed to the development of theories of rent, wages, and profits. He defined [[Economic rent|rent]] as "the difference between the produce obtained by the employment of two equal quantities of capital and labour."<ref name=":2">{{Cite web |last=Ricardo |first=David |date=1817 |title=On The Principles of Political Economy and Taxation, by David Ricardo, 1817 |url=https://www.marxists.org/reference/subject/economics/ricardo/tax/ch02.htm |access-date=2024-05-13 |website=www.marxists.org |at=Chapter 2: Rent}}</ref> Ricardo believed that the process of economic development, which increased land use and eventually led to the cultivation of poorer land, principally benefited landowners. According to Ricardo, such premium over "real social value" that is reaped due to ownership constitutes value to an individual but is at best<ref>''On The Principles of Political Economy and Taxation'' London: John Murray, Albemarle-Street, by David Ricardo, 1817 (third edition 1821) – Chapter 6, On Profits: paragraph 28, "Thus, taking the former . . ." and paragraph 33, "There can, however...."</ref> a paper monetary return to "society". The portion of such purely individual benefit that accrues to scarce resources Ricardo labels "rent".

In particular, Ricardo postulates that rent is a result of increased populations which results in assets growing scarce and in some cases diminished returns of which were once abundant. Ricardo breaks down this premise by first supposing there are three fields of  land - No. 1, 2, 3, - to yield corn, with an equal employment of capital and labour. Initially land No.1 is cultivated and is very productive as measured through the abundant surplus. Over time this abundant surplus becomes diminished as the result of an increase in population, which subsequently creates an increased demand for food. The less desired land, No.2, must now be cultivated and eventually so must land No.3 and so on and so forth. For Ricardo each new cultivated results in diminished surplus as the quality of land fails to yield the equal of that before it. In light of such diminishing surplus landowners see opportunities to charge rent as a means to compensate for the loss of returns on output.<ref name=":2" />

=== Model-making===
According to [[sociology of quantification | sociologist of quantification]] [[Mary S. Morgan]] David Ricardo can be considered ''one of the pioneers in economic modelling''.<ref name="Morgan">{{cite book | vauthors=((Morgan, M. S.)) | date=17 September 2012 | title=The World in the Model: How Economists Work and Think | publisher=Cambridge University Press | isbn=978-1-107-00297-5}}.</ref>{{rp|45}} In studying rents, for example, Ricardo experiments  numerically to determine the relative share of profit accruing to land owner, capital holder and laborers through what Morgan calls 'numerical model farming'. In his numerical and verbal accounts Ricardo tests different improvements in capital, technology or labour to increase the yield of a farm, paralleling actual experiments run by his contemporaries such as  [[Charles_Townshend,_2nd_Viscount_Townshend#"Turnip"_Townshend | "Turnip" Townshend]].<ref name="Morgan"/>{{rp|61}}

===Ricardo's theories of wages and profits===
In his ''Theory of Profit'', Ricardo stated that as [[real wages]] increase, real profits decrease because the revenue from the sale of manufactured goods is split between profits and wages. He said in his ''Essay on Profits'', "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food."